Working Paper #2009-10 – Short-Time Compensation as a Policy to Stabilize Employment

Department of Economics

University of Delaware

Working Paper #2009-10

Short-Time Compensation as a Policy to Stabilize Employment

Wayne Vroman and Vera Brusentsev

ABSTRACT

Short-time compensation (STC or work sharing) is a labor adjustment measure designed to reduce or eliminate reliance on layoffs when firms need to reduce hours worked. It spreads the reduction in hours among a wide pool of workers and provides partial unemployment compensation for the reduced hours. This paper examines STC with attention to experiences in Canada and Germany as well as the United States. It also suggests ways to increase STC use in the United States.

JEL Codes: J33, J38, J39

Keywords: Employment retention, Short-time compensation, Work-sharing, Wage compensation, Unemployment insurance, Workplace relations, Social sector reform.